Bri­tish busi­nesses must stop sell­ing out

The Jewish Chronicle - - Business - ‘The pull of the San Fran­cisco Bay area is pow­er­ful’

THE OVER­SEAS takeovers of Bri­tish-based en­ter­prises roll on. Among the lat­est UK com­pa­nies to find a new home is Staines-based NDS, orig­i­nally an Is­raeli start-up, bought last month by Cal­i­for­nia’s Cisco Sys­tems for $5 bil­lion in what was claimed to be Is­rael’s big­gest high-tech deal yet. For Cisco this is just a an­other deal in the San Jose-based group’s search for new tech­nolo­gies as it seeks to boost its ex­ist­ing suite of prod­ucts. But for the UK, where NDS is the lead­ing de­vel­oper of soft­ware for pay tele­vi­sion com­pa­nies, it is a loss of con­trol. And for Is­rael, where the tech­nol­ogy was first re­searched at the Weiz­mann In­sti­tute, it is an­other in­no­va­tive firm van­ish­ing into the depths of Sil­i­con Val­ley.

The ar­gu­ment in favour of such trans­ac­tions is that the cash re­ceived will be rein­vested in new ven­tures. In the case of NDS how­ever, it will go to pri­vate eq­uity con­cern Per­mira and NDS’S big­gest cus­tomer, Ru­pert Mur­doch’s News Cor­po­ra­tion, which has a 49 per cent stake.

NDS is by no means the first Brit-

In­deed, in cer­tain sec­tors, notably the car in­dus­try, the ar­rival of new man­age­ment and in­vest­ment at Jaguar Land Rover, Mini, Rolls-royce and Bent­ley has re­vived a mori­bund man­u­fac­tur­ing base. But car pro­duc­tion is one of a few ex­cep­tions of in­ward in­vest­ment that has been re­ally pos­i­tive.

It was only at the end of 2009 when Irene Rosen­feld of Kraft made her move on Cad­bury that a na­tion of an­gry choco­late eaters de­manded tougher City rules gov­ern­ing takeovers and over­seas bids.

It is of­ten Mrs Thatcher who is blamed for de­stroy­ing the UK’S in­dus­trial base when she took on the min­ers. In fact when Labour came to of­fice in 1997 man­u­fac­tur­ing was still the big­gest part of the econ­omy, ac­count­ing for more than 20 per cent of na­tional out­put. By the time Labour left of­fice in 2010 it was down to 12.4 per cent.

This de­cline was partly due to the rise of man­u­fac­tur­ing in the fast­grow­ing emerg­ing economies in­clud­ing China and In­dia, and the ex­port of jobs from tex­tiles to call cen­tres.

But the for­eign takeovers left no part of our econ­omy un­touched. Much of the na­tion’s in­fra­struc­ture is in over­seas hands which veteran in­dus­tri­al­ists view as threat­en­ing to the UK’S eco­nomic se­cu­rity.

Al­most ev­ery com­pany with “Bri­tish” in its name in­clud­ing Bri­tish Airports Au­thor­ity, Bri­tish Oxy­gen, Bri­tish Steel and As­so­ci­ated Bri­tish Ports have been ab­sorbed by a for­eign buyer.

Some of our great­est en­ter­prises have been de­fen­es­trated. Take, for in­stance, the chem­i­cal in­dus­try. In 1926 Bri­tish in­dus­tri­al­ists showed great fore­sight by weld­ing to­gether our four big­gest chem­i­cal and phar­ma­ceu­ti­cal com­pa­nies into a na­tional cham­pion, Im­pe­rial Chem­i­cal In­dus­tries.

Now that com­pany, which once be­strode the world and gave us ev­ery­thing from plas­tics to polyester to beta-block­ers, is no more.

As a re­sult Bri­tain, alone among the rich in­dus­trial states, no longer has a chem­i­cal in­dus­try cham­pion like Ger­many’s BASF or the US’S Dow Chem­i­cals and Du Pont.

Among the se­ri­ous threats from over­seas own­er­ship is to the na­tion’s en­ergy se­cu­rity. Four of the big six en­ergy com­pa­nies are in over­seas hands and suc­ces­sive gov­ern­ments have trusted the coun­try’s nu­clear fu­ture to big for­eign play­ers.

Just how risky this can be was demon­strated when the two big Ger­man power com­pa­nies RWE and E.ON. which had com­mit­ted to the UK’S nu­clear fu­ture, pulled out of project Hori­zon to build two nu­clear sta­tions. Bri­tain’s nu­clear re­newal is now largely in the hands of the French gov­ern­ment-con­trolled en­ergy group, Elec­tricite de France (EDF). The with­drawal of the Ger­man con­sor­tium leaves EDF with enor­mous bar­gain­ing power as it seeks to hag­gle with the UK gov­ern­ment over the “base” price it will ob­tain for its electricity and the sur­charges — likely to end up on our bills.

But does the great fire-sale of Bri­tain’s cor­po­rate sec­tor re­ally mat­ter? It has never mat­tered more.

For­eign own­er­ship nearly al­ways means loss of com­mand and con­trol, head­quar­ters staff, sup­ply chain, ex­per­tise and R&D, which have taken decades to build. That can­not be to the UK’S ad­van­tage. Alex Brum­mer is City Ed­i­tor of the Daily Mail. His new book, Bri­tain for Sale, is to be pub­lished by Ran­dom House on 27 April

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